India pitches for S&P ratings upgrade
April 26, 2013, 11:06 am

The reforms announced by the government so far have focused on increasing FDI [AP]

The Indian government on Thursday pitched for a sovereign rating upgrade at a meeting in New Delhi with Standard & Poor’s (S&P) representatives.

S&P had, in 2012, scaled down India’s sovereign credit rating outlook in April from ‘stable’ (BBB+) to ‘negative’ (BBB-) — the lowest investment grade and just a step away from ‘junk’ status — and warned the government of a ‘one-in-three’ chance of a rating downgrade to ‘speculative’ within the next 24 months.

India’s economic affairs secretary Arvind Mayaram, who led the discussions with S&P representatives, argued for an upgrade as there was no case for a rating downgrade in the light of the recent decisions taken by India, such as reducing subsidies on petroleum products.

Speaking to reporters after the meeting, Dr Mayaram said: “I think there is a case for an upgrade because we have taken the kind of decisions that most of the countries in the world have not been able to take.

“This country has shown its determination to put the economy back on track. We believe it will happen and there is no doubt about it…We have spoken to them convincingly. We have shown that reforms is on track”.

The government has announced a fiscal consolidation path to reduce the fiscal deficit to 3 per cent of GDP by the 2016-2017 financial year.

The reforms announced by the government so far have focused on increasing FDI and raising administered prices to reduce the fiscal deficit.

The economic secretary also argued that “Petroleum subsidy is around 36 per cent in developed countries and there is no attempt there to reduce that. We are working to eliminate some of the fuel subsidies.”

Dr Mayaram said that the S&P representatives were also told about the government’s resolve to check the fiscal deficit and speed up mega projects to spur growth.

57 founding members, many of them prominent US allies, will sign into creation the China-led Asian Infrastructure Investment Bank on Monday, the first major global financial instrument independent from the Bretton Woods system.

Representatives of the countries will meet in Beijing on Monday to sign an agreement of the bank, the Chinese Foreign Ministry said on Thursday. All the five BRICS countries are also joining the new infrastructure investment bank.

The agreement on the $100 billion AIIB will then have to be ratified by the parliaments of the founding members, Chinese Foreign Ministry spokesman Lu Kang said at a daily press briefing in Beijing.

The AIIB is also the first major multilateral development bank in a generation that provides an avenue for China to strengthen its presence in the world’s fastest-growing region.